HL Deb 05 July 1963 vol 251 cc1166-72

4.18 p.m.

Order of the Day for the House to be put into Committee read.

Moved, That the House do now resolve itself into Committee.—(Viscount Colville of Culross.)

On Question, Motion agreed to.

House in Committee accordingly.

[The LORD AIREDALE in the Chair.]

Clauses 1 to 7 agreed to.

Clause 8 [Power to suspend annual provision for repayment of, and to borrow for payment of interest on, certain borrowed moneys]:


moved, in subsection (3), to leave out from beginning down to and including the word "above", and to insert: Where land has before the commencement of this Act, been acquired by a local authority, and a sum was borrowed by the authority for the purpose of the acquisition, and either—

  1. (a) the land was acquired for a purpose mentioned in subsection (2)(c) above, or (not having been so acquired) was, before the commencement of this Act, appropriated for such a purpose, but the construction, extension or alteration of the works or the carrying out of the operations that constitute the purpose for which the land was acquired or appropriated is not begun till after that commencement, or was begun but not completed before that commencement; or
  2. (b) the land is, after that commencement, appropriated for a purpose mentioned in the said subsection (2)(c);".

The noble Viscount said: Your Lordships may remember that Clause 8 of this Bill gives the power to a local authority in certain cases to suspend payment into a sinking fund of the moneys they would otherwise have to put towards the repayment of money borrowed for either purposes of works of a revenue-raising character or other specified purposes which the Minister may by direction sanction. They may also borrow money for the purpose of paying extra interest on the loans when they come to be repaid in due course.

The difficulty about the clause as it stands is that it has left out one small point on the transitional stage of the Bill. The process in the clause can be used under the Bill where land has been acquired after the commencement of the Bill and is then appropriated for one of the purposes that it is allowed to be appropriated for in this context. It can also be used where the land was bought before the commencement of the Act but was appropriated after it. But as the Bill now stands, the powers in the clause cannot be used if the land was both bought before the commencement of the Act and appropriated to the relevant purpose before the Act comes into force.

There are circumstances particularly in cases of town centre re-development, where it may be that some time ago the land was bought and later appropriated for town centre re-development. At the present stage, when the Bill is about to come into law, it may be that the time for suspending money from being paid into the sinking fund, during a period when the project is not producing any revenue of its own, has not yet arrived. Nevertheless, since the Bill does not cover the case of land both bought and appropriated before the commencement of the Act, the authorities would not be able to use the powers under the Bill unless we made this Amendment. I hope, therefore, that it will appeal to your Lordships, that this transitional period should also be covered; and that this Amendment will therefore be acceptable. I beg to move.

Amendment moved— Page 6, line 4, leave out from beginning to end of line 11 and insert the said new words.—(Viscount Colville of Culross.)

On Question, Amendment agreed to.

Clause 8, as amended, agreed to.

Clauses 9 to 17 agreed to.

Schedule 1 [Local authority bonds]:

4.23 p.m.


moved, in paragraph 1, to add sub-paragraph (b): not being less than such minimum denomination as the authority may from time to time determine".

The noble Lord said: This is by no means a hostile Amendment. It is an Amendment to endeavour to clear up a point of difficulty which the Association of Municipal Corporations has brought to our attention. Clause 7 of the Bill seeks to provide local authorities with a welcome addition to the available methods of raising money. Subject to the terms of the Minister's regulations under paragraph 5 of this Schedule, this power to raise money by the issue of bonds should do much to simplify the procedure, to the advantage of lenders as well as to the local authorities.

There appears, however, to be what may be a weakness in the proposals contained in the Bill, and that is the absence of any provision to enable a local authority to specify a minimum sum which it is prepared to accept from any lender. Paragraph 1(b) of this Schedule says that local authority bonds shall be issued in denominations of five pounds and multiples of five pounds". If that means that local authorities who choose to adopt this method of borrowing are to be forced to accept sums of £5 from anyone who seeks to buy a bond, it is likely that many authorities will think twice before adopting this new method at all. Although a simple method of raising capital, the issue of these bonds would inevitably involve a fair amount of book work in the treasury department, occupying staff and consequently representing expenditure, in relation to loans of less than a minimum, which may well be regarded by the local authority as too costly. It is likely to be just as expensive to keep the records and to pay by postal order the half-yearly interest on a £5 bond, amounting to, say, 1s. 6d., after deducting tax, as it is to perform a similar operation by cheque in respect of a loan of £100,000. Many local authorities already have minimum sums below which they are unwilling to borrow money on mortgage, the minimum ranging from £50 upwards.

It should be remembered that the object of this particular provision in the Bill is not to provide a new form of national savings—national savings, I think, are well catered for in many other directions: Trustee Savings Banks, National Savings Banks, Post Office savings banks and so on—but to assist local authorities to raise money which they have been empowered to borrow; and to the extent that it makes it expensive or burdensome for local authorities to use it to that end, it will have failed. It is understood to be the view in some quarters that the present wording of the Schedule does not preclude the authority from prescribing a minimum sum. On the other hand, the view has been expressed that local authorities issuing bonds under the regulation relating to housing are bound to issue them in the denominations mentioned in the relevant Schedule to the Housing Act. I agree that there is a slightly different wording in this Bill, and that slightly different wording may suffice to alter the situation. But, on behalf of the local authorities, who will naturally, if possible, desire to use this new power to raise money, I am sure it is important that the point which I have raised should be cleared up.

The brief point is: will local authorities be able, under the provision of this Bill, to prescribe a minimum sum below which they will not accept loans? I assure the noble Viscount that this is in no way a hostile Amendment. One appreciated and admired the manner in which the noble Viscount, Lord Colville of Culross, moved the Second Reading, but I am sure he will not object to my raising what is a substantial point so that local authorities who want to take advantage of this Bill, when it becomes an Act, can have it satisfactorily cleared up. I beg to move.

Amendment moved— Page 13, line 9, after ("pounds") insert ("not being less than such minimum denomination as the authority may from time to time determine").—(Lord Burden.)

4.29 p.m.


I am very grateful to the noble Lord, Lord Burden, for raising this matter, and of course I do not object in the least to any attempts that may be made to clarify it. I recognise that some doubt has arisen in the minds of the members of the Association of Municipal Corporations about this, and I should very much like to clear it up. I must say, however, that I am afraid I cannot accept his Amendment, for reasons which I will try to explain to him. Perhaps I can persuade him that in fact all is well with the Bill as it stands, and that his Amendment is not necessary.

First, I assure the noble Lord and those who are interested in this matter that there is no suggestion that a local authority who wish to take advantage of the power to issue bonds under paragraph 7 of Schedule 1, should be forced to issue them at a sum of £5 unless they so desire. Equally, of course, if they want to do so, they will be able to under the form of words in the Schedule. But there is no requirement that they must do so. It was not intended by me or anybody else that that should be so. The difficulty that would arise if one attempted to change the wording in the way the noble Lord suggests is this: although this is a General Bill for all local authorities, there have been about 150 local Acts for individual authorities which have in the past already given them power to borrow by means of bonds. Some of these Acts contain wording which deals with the denominations in which these bonds should be issued. I have looked at some this afternoon.

For instance, the Second Schedule to the East Ham Corporation Act, 1957, says that bonds shall be issued in such amounts and denominations of £5 and multiples of £5 and for such periods, not being less than seven years, as the Corporation may determine. The Derbyshire County Council Act, 1954, in the Fourth Schedule said much the same; and a large sum was raised by the Derbyshire County Council. A more recent example is the Manchester Corporation Act of last year, which uses the same words in the First Schedule as appear in the Bill now before your Lordships.

The difficulty is that if you change the words used in this Bill to put in the ability of the local authorities to specify the minimum denominations, then you throw doubt on what the local authorities, who have their private Acts, can do under the wording in their own Schedules. It would be a great pity to throw doubt, where none has hitherto existed, upon the powers they have always had and exercised to specify the I minimum sums in which they will issue bonds. I am sure the noble Lord will know enough about the difficulty of interpreting Statutes where you change a well-known and familiar form of words in a new enactment; and where there is a risk of throwing doubt about what is being done and may wish to be done in future under other older Acts. I think this is a sufficient reason why we should leave this Bill as it is; particularly as no difficulty has arisen on this. But I will bolster my argument by one other point.

The noble Lord is afraid that local authorities might be required to issue a bond for £5; and it may be that this is an absurd thing to do. But, if a citizen could require them to do that, if they can be required at all, he could also require them to issue a bond of any multiple of £5; say, £25 or £95 or £57,405, or something equally absurd, because of the ridiculous figure that would come out. It would be quite obvious to anybody interpreting this Act that such cannot be the true interpretation of the words as they now stand. I hope that the noble Lord will feel that this is a satisfactory explanation. I recognise the difficulty, but I believe it to be an unreal one and not likely to arise in practice; because the local authorities will not be forced to do these things if they do not want to. I hope that, with that explanation—which is the best I can give with my researches; and I do not think that the Housing Act comes in on this—the noble Lord may be able to withdraw his Amendment.

4.34 p.m.


Perhaps it might be of assistance to say a few words on behalf of the Ministry of Housing and Local Government. We have taken legal advice on this point and it agrees in every way with what my noble friend has said. The first point is that of course the local authorities will not be obliged to issue bonds at all. Under the wording of this Schedule, if they should decide to issue then they will be in denominations of £5 or multiples of £5. They can choose for themselves. They cannot be forced to issue any particular denomination, so long as it is in multiples of £5. With regard to the second point, the great difficulty and danger of having two Statutes which say different things about the same matter is that the courts will normally seek to give the two things different meanings. Therefore, if we were to accept the noble Lord's Amendment it might raise doubts about the meaning of any similar provision elsewhere, and we have heard from my noble friend behind me of the existence of these provisions. Therefore, I hope that the noble Lord will be satisfied with the explanation he has received.


I am most grateful to the noble Lord, Lord Hastings, and to the noble Viscount, Lord Colville of Culross, for the trouble they have taken in order to deal with this Amendment. I should be the last one to attempt to upset the tradition of the past. From what has been said, I take it that a local authority will not be compelled to issue bonds and they are also free, so long as the bonds are in multiples of £5, to fix the figure below which they will not accept a loan. If that is the position, I am prepared to withdraw my Amendment, because I think that it is agreed by both sides that to ask a local authority to accept a bond of £5 is really playing with things. A local authority is not a savings bank. With your Lordships' permission, I beg leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

Schedule 1 agreed to.

Remaining Schedule agreed to.

House resumed: Bill reported with an Amendment.

House adjourned at twenty-one minutes before five o'clock.